BBC reports :
Four years ago, fearful of a property crash, David and Maureen Somers sold their house and bought gold… Mr Somers and his wife Maureen claim it would be “vulgar” to say how much they invested in gold. However, he does say they sold their three-bedroom, detached house in Poole for a significant profit, and the couple have since almost doubled their money again in gold.
“Over thousands of years gold has never reached zero. The price is a risk, but at the end of the day I will still have the same amount of gold,” he says.
“There are people who probably hold bank shares that would have been seen as conservative investments and you could question what they are going to be left with.”
Gold-bugs, not so crazy now, eh?
So Guido says goodbye (in Icelandic) to Singer & Friedlander :
From: Armann Thorvaldsson
Sent: 08 October 2008 13:53
To: DL All Staff
Subject: Important Message to All
I wrote to you yesterday about our intensive efforts to work through the current crisis and promised to give you more news today. We have worked with a number of investment banks, our parent in Iceland and the FSA over the last two weeks to explore a large number of possible options to ensure the future of KSF. On several occasions, we have come close to finding solutions but the chaos in financial markets has consistently undermined our efforts. We now face the prospect of insufficient liquidity, rapid deposit outflows and no prospects for correcting the situation in the short term.
I have therefore convened a meeting of our Board in order to consider the next step. That meeting has concluded we have no choice but to place Kaupthing Singer & Friedlander into administration with immediate effect. We will give you all more information on the implications of this decision in the course of today and ask for your patience in order to make the best of a very unhappy situation for all of us. Can I ask you to continue work in as normal a fashion as possible, cooperating with the Administrators in their work with us. This decision relates only to KSF Ltd and not its subsidiaries. They will continue to trade unless advised otherwised. We will give a more complete information update later in the day, certainly before 4pm.
You have all worked with incredible effort to make KSF a success and we were well on our way to achieving it before the credit crisis had such a sudden and disastrous effect. Now I can only ask for your help in making the end of the process as orderly and professional as possible.
I am personally gutted that it has come to this, especially in light of the fact that our problems have arisen out of association rather than any fundamental problems with the business. On the contrary I belief that we have built a great business over the last couple of years and during this time I have worked with many of the most talented and professional people I have ever met. I am very sorry.
Kaupthing Singer & Friedlander Group Plc
One Hanover Street
Won’t be the last…
Her Majesty The Queen has been pleased to approve, under the Bank of England Act 1998, the appointment of Charles Bean as a Deputy Governor of the Bank of England for Monetary Stability, for a period of five years.
This explains a lot.
Guido has lost track of the repeated Bank of England interventions to try and flood liquidity into the money markets. Those alone could easily be as much as £200 billion or more.
The government bail out, never mind the Bank interventions, is secured against the hard work of Britain’s 28 million taxpayers. The government is risking more than £10,000 for each taxpayer.
UPDATE : The bail-out we are told was finalised at 5 a.m. this morning, the tri-partite authorities meeting in Downing Street was at 5 p.m. last night. Good to know that a £300 billion plan to “guarantee” the economy can be cobbled together in less time than it takes to do a school homework project. Fills Guido full of confidence.
… a National Investment Bank to put new resources from private institutions and from the government…. Exercise, through the Bank of England, much closer direct control over bank lending. Agreed development plans will be concluded with the banks and other financial institutions. Create a public bank… set up a Securities Commission to regulate the institutions and markets of the City… Set up a tripartite investment monitoring agency to advise trustees and encourage improvements in investment practices and strategies… We expect the major clearing banks to co operate with us fully on these reforms, in the national interest. However, should they fail to do so, we shall stand ready to take one or more of them into public ownership. This will not in any way affect the integrity of customers’ deposits.
The Peston wrote a blog note this morning in which he suggested that the banks had “asked” the chancellor for capital injections. He did so without being able to be clear on the names, terms or size of such a transaction.
Since it is known that he speaks with the authority of Downing Street, UK banks crashed approximately 20 – 30% on the news taking a (tentatively recovering) market with them. The volatility, of course, is much worse than normal because there are no longer any short sales of banking stocks to absorb the risk.
Had the banking stocks been allowed to follow the market and trade naturally, they might well have been able to continue to go to the market for new capital (Lloyds did this on the day of the HBOS announcement with great success). Of course, this government’s need to be constantly seen to be doing something has triumphed and Peston’s attempt to make the chancellor look important has resulted in the largest one hour crash in banking stocks in living memory on the London market.
We have a regulatory announcement system PRECISELY to stop this kind of activity If material talks take place, a company must announce with absolute clarity what is contemplated so that shareholders are able to judge simultaneously and equally the likely impact on the stock.
Once again, the political imperative to make Gordon Brown look involved and competent has put in jeopardy the already fragile UK banking system and the markets upon which it relies.
Had a hedge fund published this kind of speculation while trading in the stocks, they would now find themselves the subject of an FSA investigation.
Quite. See also Who Told Peston?